MetroPCS Stockholders Mull Sweetened Offer

NEW YORK (TheStreet) - Deutsche Telekom has upped its offer to get approval for its proposed T-Mobile USA - MetroPCS merger. They had to. The stakes are way too high.

DT has restructured the amount of debt that will be carried over to the new company (a reduction of $3.8 billion). DT also said it will cut the interest it plans to charge on the loan by half-a-percentage point and increase the "lock-up" period (to 18 months) before it could sell any of its 76% of the new company's shares.

MetroPCS' Board of Directors was supposed to vote on DT's original, "best and final offer" tomorrow. They've now postponed a vote on the new "best and final offer" until April 24th.

Deutsche Telekom had to sweeten the pie to appease some of the larger investors who have portrayed the transaction as a raw deal for MetroPCS shareholders. Opposition from Paulson & Co. and others had became a formidable obstacle. But DT had to do something: without this merger, both T-Mobile and MetroPCS would be in big trouble.

Looking ahead, we still don't what Deutsche Telekom has planned for the company though we do know that "T-Metro" (or whatever it will be called) could have enough subscribers to challenge Sprint for third place among US mobile carriers. That alone is a positive for investors.

The strength of the new company -- and its stock price -- is likely to revolve around its spectrum - the wireless frequencies in which a carrier is allowed to "broadcast". Spectrum is finite. There are only so many frequencies available in which cell phones can operate properly without interfering with other types of broadcasting or causing harm to users (consider high-frequency signals such as microwaves).

Allotted spectrum is arguably the most valuable resource each company "owns". If you have enough spectrum, you can install more and better cells everywhere, on hilltops and buildings far and wide. Too few and you're quickly stuck peddling yesterday's technologies.

Sometime back AT&T was willing to spend $39 billion buy T-Mobile, not for its subscribers but for its spectrum. When that deal was squashed, T-Mobile received $3 billion in cash and an allotment of AT&T frequencies as compensation. Those frequencies were not nearly enough for T-Mobile to unleash a 4G/LTE network of its own but that cash will go to help DT with the MetroPCS merger.